Dear shareholders, business partners and co-workers,
In the business year 2013, Unior d.d. had to face a number of challenges. The company was burdened with debt and was unable to pay the principal amounts of loans and therefore had to reach an agreement with the banks on loan reprogramming. What is more, ever since the beginning of the crisis in 2008, Unior's operations have failed to meet its stakeholders' expectations. In 2012, the company suffered a record loss of EUR 15.1 million, mainly as a result of the revaluation of its investments and other assets, which was exacerbated by an operating loss caused largely by one-off expenses. These business results lead to a disturbance and often also the distrust of the owners, banks, clients, suppliers and last but not least the employees. There were many who, quite rightly, doubted whether the business recovery foreseen in the company's business plan for 2013 and in its restructuring plan had any chance of succeeding at all.
In July 2013, Unior managed to conclude long-term negotiations with all the banks by signing a general agreement on financial restructuring. Based on its wording, Unior d.d. plans to halve its indebtedness by 2019 by repaying the principal amounts from operations and by divesting the non-core assets. In this respect, the sale of RTC Krvavec and the activities of the company's Tourism programme represent the most important items. As indicated by the agreement, while Unior failed to pay the principal amounts, it did pay the interest on a regular basis. The agreement also defines the minimum value of key performance indicators to be reached by the company until 2016, not only in order to preserve the validity of the agreement but also to improve the operation, reduce indebtedness and strengthen the overall business condition of Unior. In Slovenia, the concluded general agreement on financial restructuring is seen as an example of a well-timed and well-thought-out financial restructuring, which is essential if the company wants to continue to run its business smoothly.
In order to secure its future, Unior had to embark in 2013 on an effective implementation of the measures designed to strengthen its operation. This meant that the company began a process of business restructuring involving more than 80 concrete measures and activities across all business areas and processes, which were expected to raise the operating result by EUR 6.8 million. The achieved business turnaround in 2013 was largely achieved through a sound implementation of the foreseen activities and measures, which lead us to exceed the expected outcome by over 10 per cent. It should be pointed out that in 2012, the company registered an operating loss of EUR 3.4 million, whereas in 2013, its operating profit amounted to EUR 4.8 million. Of course this would never have been possible without our employees who were committed to fulfil their tasks.
In 2013, Unior crossed several important milestones in is operation. To begin with, the company recorded its biggest sales in history, both in the Forge Programme and in the Special Machines Programme. Secondly, the Forged Parts Processing Plant located in Slovenske Konjice celebrated its 20th anniversary and, for the first time ever, exceeded one million euros in monthly sales in October. This is an important achievement, since it is the forged parts processing activity that we see as having the most value added potential and additional growth opportunities in the future. To continue, Rogla and Terme Zreče were granted the olympic sports centre status for some sporting disciplines until 2017 by the Olympic Committee of Slovenia. In February, we also organised a Snowboarding World Cup event. As for the Hand Tools Programme, it once again after a number of years saw positive results thanks to the measures implemented. In 2013, Unior d.d. registered the highest net sales of EUR 166.5 million in its history.
As foreseen by the business plan, the Sinter Programme was combined with the Forge Programme as of 1 January 2013, which enabled us to rationalise our operation. In May, the process of shutting down the Vitanje hand tools processing plant was completed. The activity was moved partly to Zreče and partly to Lenart, which resulted in reduced operating costs. In addition, the programme of the divestment of non-core assets was initiated. The company sold its shares in the companies Solion from Russia, and in the companies Roboteh and Bionic from Slovenia, which are all outside Unior's core business.
A considerable amount of energy and time was invested into talking to some of our customers and suppliers that were starting to feel uncertain about Unior d.d. due to its considerable debt, unclear outcome of the negotiations on loan restructuring and, last but not least, the uncertain situation in Slovenia. With the solid results appearing in the course of 2013 and the honouring of promises in the second half of 2013, the company's tainted reputation began to recover and the customers and suppliers regained their trust in Unior.
In December, the new Supervisory Board came into office, composed of: Branko Pavlin, Chairman of the Supervisory Board, Franc Dover, Deputy Chairman and the members Marko Pahor, Drago Rabzelj, Marjan Adamič and Darko Dujmović.
As already mentioned, in 2013, Unior d.d. recorded EUR 166.5 million of net sales, i.e. 6.8 per cent higher than in 2012 and 0.9 per cent more than envisaged. In 2012, the company had EUR 9.2 million of EBITDA, EUR 14.4 million in 2013 or 56 per cent more than in 2012, but 7.1 per cent less than planned. The gross added value per employee amounted to EUR 28,791, i.e. 8.2 per cent more than the year before, but 1.3 per cent less than planned. In foreseeing the net profit or loss for 2013, there was no value adjustment for investments due to unpredictability, which means that the planned net profit or loss foresaw a profit of EUR 45,000. With the exclusion of value adjustment for investments and deferred taxes, the company recorded a net profit or loss of EUR 95,000, partly at the expense of lower financing costs, which was the result of the lower value of the Euribor than envisaged. By taking into account the value adjustment for investments, the company registered EUR 3.5 million of net loss. The value adjustment for the shares of Banka Celje, which we tried to sell during the year, added another EUR 4 million of loss to the result.
In 2013, Unior had on average 2075 employees, i.e. 2.2 per cent less than planned and 2.8 per cent less than in 2012. Currently there is no recruitment of new employees, with the exception of specific jobs facing a deficit (CNC operators, forgers and occasionally chefs and waiters).
The year 2013 was focused on preserving and improving the cash flow, with the actual amount of investment reaching only EUR 5 million per year, which is significantly less than a few years ago when Unior had invested more than EUR 10 million per year. An additional improvement was made to liquidity by obtaining a better inventory turnover, whose value decreased by EUR 5.5 million in the year. This enabled us to reduce the rate of outstanding liabilities to suppliers.
In 2013, Unior d.d. exceeded every minimum value of performance indicators determined in the general agreement on financial restructuring, surpassed many of its ambitious goals and came close to others, and last but not least significantly improved all the indicators compared to 2012. By doing so, our company is is gradually regaining our stakeholders' trust. There should be no reason for the management's dissatisfaction with the results achieved in 2013, which of course does not mean there's any room for complacency.
The business plan for 2014 foresees EUR 165.6 million revenues, i.e. EUR 0.9 million less than in 2013. Every programme is expected to see a growth in sales, with the exception of Special Machines, which saw record sales in 2013. The business restructuring measures will continue in 2014 and will include EUR 3.3 million worth of concrete measures aimed at strengthening the business result. In 2014, Unior intends to achieve EUR 3.9 million of net profit or loss, without the effects of possible value adjustments. As for the cash flow in 2014, the general agreement stipulates a repayment of part of the principle values, along with investing EUR 6.2 million and retaining the average number of employees. The gross value added per employee is expected to rise to EUR 31,365 per employee on a yearly basis i.e. by 8.9 per cent. The 2014 objectives are realistic and achievable, and once again represent a considerable step forward in our operations compared to 2013.
Darko Hrastnik
President of the Management Board
